Mining and Extractive Companies: Promises and Progress
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FACING FINANCE | DIRTY PROFITS 6 | 2018 Mining and Extractive Companies: Companies: Mining andExtractive Promises and Progress Promises 6 2018 | 1 DIRTY PROFITS 6 PROFITS DIRTY | FACING FINANCE FACING Content Executive Summary 3 Features on extractive industry Extracting Value: Banks, mining and biodiversity 45 Extracting Value: Banks, mining and climate change 47 Introduction 7 Artisanal mining, child labour in the supply chain of multinational companies 49 Methodology 9 Harmful Investments Introduction 51 How banks contribute to Human Rights violations – Digging Deeper: Corporate commitments The case of Samarco Mineração 52 and company classification 12 France: BNP Paribas and Crédit Agricole 54 Germany: Deutsche Bank and DZ Bank 57 Switzerland: Credit Suisse and UBS 60 International Norms and Standards and their Netherlands: Rabobank and ING 63 relevance to extractives 14 United Kingdom: HSBC and Barclays 66 Company Profiles Recommendations and Demands 70 Anglo American 17 Barrick Gold 19 BHP 22 Appendices Eni 25 Exclusions 75 Gazprom 27 Survey Questions 76 Glencore 29 Abbreviations 81 Goldcorp 32 Grupo México 35 Rio Tinto 38 Sources 82 Vale 41 Thanks and funders 87 2018 | Cover Photo: Indonesian police stand guard at the open-pit mine of PT Freeport’s Grasberg copper and gold mine complex near Timika, DIRTY PROFITS 6 PROFITS DIRTY | in the eastern province of Papua, Indonesia September 19, 2015. © REUTERS/Muhammad Adimaja/Antara Foto FACING FINANCE FACING 2 Executive Summary he global extractives industry is heavily involved in some The mining and extractive companies selected were all covered of the worst labour, environmental and human rights in previous editions of the Dirty Profits report and all have actual T violations. The rights of communities, farmers and violations at their operations, in many cases these violations indigenous people are being trampled in the push for ever persist due to the failure of companies to provide remedy. more extraction. Indeed all businesses must respect and The ten companies cover some of the largest global extractive contribute to the society where they operate, and investors companies: Anglo American, BHP, Barrick Gold, Eni, Gazprom, too have a critical role to play, particularly in the current Glencore, Goldcorp, Grupo México, Rio Tinto and Vale. All of mining upturn. these companies are illustrated with specific cases of human rights and environmental violations that include for example In Dirty Profits 6 Facing Finance shows how extractive pollution and harmful waste spills, labour violations and companies have dealt with human rights and environmental repression of indigenous communities. Five of these ten violations shown in Dirty Profits reports since 2012, as companies (Glencore, BHP, Rio Tinto, Barrick Gold and Anglo well as how selected European banks have reacted to these American) were in 2011 already classified as “Most Contoversial violations in their provision of finance over time. Mining Companies” by Rep Risk. From a wider environmental standpoint, the extractives industry has a substantial impact on climate change and 7 of 10 companies investigated in this report are responsible for nearly 7,5 % of global industrial GHGs (1988-2015).* The ten banks selected cover the largest two banks in each of the following countries: the UK, Germany, France, the Netherlands and Switzerland.** The results show that banks have continued to invest in destructive mining companies, despite knowledge of violations (as investigated by NGOs including Facing Finance). Over €100 billion has been provided by the ten banks through capital provision (loans, equities and bonds) to the ten companies over the period 2010–2017 and nine banks have current shareholdings totalling €6.9 billion. In total BNP Paribas (€15.9 billion) and Barclays (€15.4 billion), closely followed by Crédit Agricole (€14.2 billion), were the largest providers of capital to the companies over the seven year period (See diagram 1 and 2). Rabobank and DZ have the lowest investments over time and Rabobank has no shareholdings in any of the extractive companies. UBS (€2.2 billion) and Deutsche Bank (€1.5 billion) have the highest current shareholdings in the companies. 2018 | DIRTY PROFITS 6 PROFITS DIRTY | * This information in the report has largely been gathered by NGOs in the countries of operation – including Russia, Guatemala, Nigeria, Mexico and Madagascar. ** HSBC and Barclays, UBS and Credit Suisse, DZ Bank, Deutsche Bank, BNP Paribas and Crédit Agricole, ING and Rabobank. 3 FINANCE FACING Executive Summary Diagram 1 and 2: Capital provided by banks to companies over the 15,960 12,949 10,757 BNP Paribas HSBC UBS period 2010-2017 in € millions (by bank and by company, rounded to nearest million) When analysing by country: The research also 15,450 shows that the top two French banks provided Barclays 9,701 8,560 the highest amount of capital provision Deutsche Bank ING to harmful extractive companies over the period, with the UK banks coming in second. The Netherlands had the lowest amounts, 14,236 Crédit Agricole 9,045 particularly Rabobank. Credit Suisse 1,319 2,331 DZ Rabobank Bank 26,541 11,533 8,552 Glencore Gazprom Eni 8,465 6,326 5,540 Rio Tinto Barrick Gold Vale 20,315 BHP Billiton 7,198 Anglo American 3,121 2,710 Grupo México Goldcorp Diagram 3: Capital provision 2010–2017 in € millions by Country. (rounded to nearest million) France United Kingdom Switzerland Netherlands 15,960 15,450 10,757 9,045 Barclays UBS Credit Suisse 8,560 BNP Paribas ING 14,236 12,949 Germany Crédit Agricole HSBC 1,319 2018 | 9,701 DZ Deutsche Bank Bank 2,331 Rabobank DIRTY PROFITS 6 PROFITS DIRTY | FACING FINANCE FACING 4 Executive Summary The violations committed by companies covered in the report This report shows that most European banks are not doing are varied, however, a significant issue emerging from previ- enough - on the whole they do not disclose how they are ous cases is the lack of remedy provided by companies to those encouraging extractive companies to improve their human affected. Conflict over water and land rights too are significant. rights and environmental performance, nor are they willing to Additionally, companies seem to attempt to evade their respon- communicate their methods or specific red lines for exclusion. sibilities via the sale of troublesome mine assets, Rio Tinto for In our survey of the 10 banks covered in this report, BNP Paribas example has sold off at least two of the five mines that Facing -Fi and HSBC are among the few banks that publish information nance reported on in relation to human rights and environ mental on their engagement activities, but they do so only on an violations, without rectifying either the environmental damage exemplary and anonymized level. In this case, Rabobank’s or providing remedy for communities affected. Some examples of reporting on engagement clearly constitutes the best example funding provided by the ten banks to the companies include: among the respondents, as the bank details the industry and region as well as a description of the issue, its type (social, Since 2012 Facing Finance has reported on violations at environmental, governance) and the status of the engagement for Barrick Gold’s operations (including environmental damage, all engagement processes, where the sustainability department riverine tailings disposal and use of excessive force by was involved.1 None of the banks covered in this report were security personnel). Facing Finance directly notified the willing to provide a detailed specific answer to the question of banks UBS, BNP Paribas, Deutsche Bank and HSBC of these whether they had engaged with any of the extractive companies concerns each year since 2014. Yet all four of these banks still in this report. This results in banks continuing to pour funds hold shares in Barrick Gold to the value of €168 million. In into extractive companies with well documented human rights addition HSBC, UBS and BNP Paribas have over the seven year and environmental abuses. Investors are being protected, but period provided capital of over €1 billion each to the company. human rights and the environment are not. And since 2014 the three banks have each given €369 million Euro. The Dirty Profits extractives report highlights that there is a crying lack of transparency about the finance industry’s actual Gazprom, despite being the third highest global carbon engagement and actions taken with regard to harmful companies, emitter, operating oil rigs in the Arctic, and being responsible which means that we know practically nothing about the for various oils spills in the Arctic tundra of Russia, has rationale for where monies are invested. This is a scandal and received capital every year since 2010 from Deutsche Bank - the finance industry is facing increasing calls to do something totalling over €2 billion Euros. Facing Finance has reported about it. on violations by Gazprom since 2013 and there is increasing evidence that the company has violated the right to Free, This report shows too, the long timescale and the significant Prior and Informed Consent of indigenous people. effort it takes for the provision of remedy once violations have occurred. Victims of human rights abuses have the right to The company Samarco Mineração (jointly owned by BHP effective remedy, as specified for example in articles 2.3 and and Vale) was responsible for the worst environmental 14 of the International Covenant on Civil & Political Rights catastrophe in the history of Brazil when its tailings dam and pillar three of the UN Guiding Principles on Business and broke in Minas Gerais, Brazil in November 2015. General Human Rights. Both states and companies are responsible in corporate finance was still provided directly to the company ensuring that there are mechanisms in place which provide despite apparent evidence that the dam was not being well access to remedy.